7 Simple Money Management Tips To Save Better in 2020

It is an accomplishment to manage your money

As a teenager, I always used to wonder how my future self was going to be financially independent and not be fussy about my expenses.

I was curious. And this is one of the reasons that I chose Finance and Accounting as my major during my MBA.

Over 6 years back, when I completed my post-grad, I heard about this term ‘freelancing’, something I was not at all familiar with.

Again, curiosity came into effect, and I wanted to give it a try. At that time, my only objective was to earn a few bucks and see if it clicks for me or not.

Luckily, it did! I found my passion for writing and started earning from it. Can someone tell ‘What I did with those earnings’? Yes, I decided to save and invest a good chunk of them in a tax-free savings account.

That was the first time I understood that merely earning money was not going to take me anywhere close to my long-term goal of being ‘financially independent’. To achieve this tag, I had to acknowledge the magical essence of savings and investing money.

Sometimes, excessive expenditure can take a toll on our financial health. Spending money on something that doesn’t create value is equivalent to wasting it. Now, who would like to waste their hard-earned money in buying useless stuff? Nobody would, right?

When it comes to money management, there is no rocket science involved. It doesn’t require you to have a finance degree for being good at tracking and managing your money.

If you are decently good enough with numbers, then you are on your path to managing your money.

“Money is always eager and ready to work for anyone who is ready to employ it.” ― Idowu Koyenikan

The process of creating wealth is an ongoing one. To achieve this long-term objective, you should hone effective money management skills that ultimately lead to gaining financial control.

When was the last time you made an impulse buy? Was it really worth it? A few hours or days later, did you feel you could have invested or saved that money for buying something valuable?

Taking control of your money saves you from leading an overwhelming paycheck-to-paycheck lifestyle and makes you aware of your savings and expenditures.

You are assured that your future is secured, and you are all geared up for any unforeseen circumstances.

Importance of Money Management

Money, when managed smartly, can make you feel confident about your future. No worries, no stress!

You are aware that you won’t be a victim of the brutal time value of money. You are aware that your money won’t lose value in the future if managed judiciously.

“Money, like emotions, is something you must control to keep your life on the right track.” ― Natasha Munson

Here are a few reasons that make money management an important element for having peace of mind:

• It offers a realistic approach and tells us where we are and how much we need to hustle to reach our goals.
• It makes us feel less anxious or insecure about the future or our post-retirement plans and keeps us focused on the present.
• It instills a feeling of control within ourselves as we decide on what, when, and where to spend.
• It lets us have the best facilities in terms of healthcare, insurance, education, housing, etc. for ourselves and our family.
• It makes paying for debts or mortgages easier, thereby improving your credit score.
• It generates several sources of passive income including interest, dividend, rent, etc.

Money Management Tips

Money management is easy, and as mentioned before, you don’t have to be a pro at handling your finances. The willingness to spend, save, and invest right is all you need to be successful at managing your money.

Let’s have a look at these quick and easy money management tips and get started with the process of building wealth.

Identify Your Priorities

Identifying and noting down your priorities helps in tracking your spending behavior. This not only throws lights on the areas that need your monetary attention but also the ones where you were spending money recklessly, without any obligations.

Once you have enlisted your priorities, be it short-term or long-term, you will be aware of how much you need to keep aside for the important life events. This can range from planning your wedding, buying a cute pup to financing your own education.

“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” — James W. Frick

Jot Down Your Expenses

We all bear certain expenses that are fixed and impossible to escape from. They generally include utilities, mortgage, automobile insurance, gym memberships, parking lot subscriptions, mobile bills, and the list continues.

For having a clear picture of your expenses, you might want to refer to your previous bank statements or bills. Once you have jotted down the amounts, just do the basic additions and subtractions.

Deduct these fixed monthly expenses from your salary (post-tax) and see how much money you still have as savings.

If your savings are more, then you are on the right track. And there won’t be any issues if you plan to set aside a fraction of it for meeting your lifestyle expenses such as restaurant dine-ins, shopping, haircuts, or anything you’d like. In case, your savings are less, or almost zero, then you should rethink on your spending criterion.

Create A Savings Account

Savings account, as the name suggests, inculcates saving habits in individuals. The earlier you start saving, the better it is. The good news is it doesn’t have to be grand.

Start with something small, and then gradually pace it up for better results. If you are planning to open a savings account, then don’t forget to compare the interest rates provided by different banks.

Even if you save, say $50 from your monthly income, you will end up saving $600 a year. If your earnings increase, you should enhance your savings too.

Your savings won’t sit idle in the bank accounts; you will be earning interest rates, and getting benefit from the compounding rule, hence more money.

Say NO to New Monthly Expenses

Maybe you received a hike in your salary, maybe your freelance career is on roll, but don’t be tempted to add a new monthly expense to your list of recurring expenses just because you think you can ‘afford’ it. If it is avoidable, then you must avoid it.

“Many folks think they aren’t good at earning money, when what they don’t know is how to use it.” — Frank A. Clark

Compare Prices

If you are a smart shopper, then you know what I am talking about. You can save money by comparing prices of products and services, and buying the ones at discounted rates. Of course, quality should not be overlooked when making comparisons.

For comparing prices, you can install apps and use online platforms and check if your store or competitors are having any promotional offers, coupons, promo codes, etc.

From grocery stores to restaurants to hair salons to factory outlets, you can use this tip anywhere to save some money.

6. Don’t Overuse Credit Cards

Credit cards allure us to spend a little extra when we are out of cash. We don’t overthink making the excessive use of credit cards because we know that we still have one month to pay our debt/expenses. Then, it works for our credit score or improving our credit history too, if we pay our debts on time.

“Paying $99.00 a month for a maybe is a “risk” that ends up taking your “reward.” — The Credit Repair Book: The Credit Repair Company’s Secret Weapon.” ― Cornelius J.

This might look like a win-win situation, but in reality, you are losing your money.

By overspending on expensive things, you are only burying yourself in debts. When your debts are not in control, you will be surrounded by stress and worries.

Enjoy Employment Benefits

Most of the companies sponsor retirement accounts such as 401(k) to their employees. They invest a specific portion (as decided by the employee) of the employee’s paycheck in these accounts and the employee receives the accumulated amount post-retirement.

Since different countries have different retirement plans, you should check with your organization to see which plan they offer.

Besides, many companies offer health and medical benefits to their employees. Say, if you are planning to visit a massage therapist next week, and your organization covers medical insurance, then you will be paying less or nothing from your own pockets. How cool is that!

In Conclusion

The essence of money management lies in creating a balance between your spending and saving habits.

Once you figure out your spending patterns, you will understand how much you can save and further invest in the market.

Creating a plan and following it for a month or two won’t help you in the long-run, but being persistent will certainly do.

Try with the strategies that work the best for you. For some, sticking to one money management strategy would do wonders, while for others, it would be an amalgam of strategies.

So, the best bet would be to continue following the hit and trial approach until you find a feasible way of managing your money.